15 Nov 2017
China Sourcing Update: Major Price Indicators (Oct 2017)
1. CPI growth accelerates in October
The year-on-year growth rate of China’s consumer price index (CPI) went up from 1.6% in September to 1.9% in October, which was higher than market expectations (see exhibits 1 & 2).
The rise in the CPI growth in October was caused by a slower decline in food prices. The year-on-year growth in pork prices improved from minus 12.4% in September to minus 10.1% in October, while the year-on-year growth in vegetable prices picked up from minus 1.0% in September to 0.3% in October. Consequently, the year-on-year growth in the food component in the CPI improved from minus 1.4% in September to minus 0.4% in October. Meanwhile, the year-on-year growth in the non-food component stayed flat at 2.4% in October.
Looking ahead, the non-food inflation is likely to remain high as the recent rise in domestic ex-factory prices will be translated into higher non-food prices; meanwhile, the food inflation is expected to stay low in the near future. All in all, we expect the CPI growth to stay around the current level in the rest of the year.
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